February 22, 2007

Healthcare

Motivations for Employer Based Healthcare

Carroll Andrew Morse

I’ll admit to being surprised by the spirited defense of employment-based healthcare offered by commenters on this blog and in a few face-to-face discussions I’ve had. Mark Schmitt, writing just yesterday on the American Prospect’s weblog, adds an angle to this discussion not yet mentioned here, suggesting that many people prefer employer-based health insurance for the simple reason that they don't want the responsibility of choosing a health plan on their own…

On the other hand, an immediate transition to an individualized system seems unrealistic, and also politically dangerous. Not only do you have to give up the dollars that employers are putting in, but you also lose their role in helping to navigate the choices in the system (as Bruce Vladek, former head of HCFA, once pointed out, people may say they want choices but they really want somebody in HR to tell them what to do)…
There is also a more extreme view, expressed by Lord Douglas Jay, a member of the British Parliament in the 1940s. Lord Jay’s sentiment is rarely expressed in direct fashion today, but almost certainly exists in the minds of some healthcare reformers…
Housewives on the whole cannot be trusted to buy all the right things where nutrition and health care are concerned. This is really no more an extension of the principle according to which the housewife herself would not trust a child of 4 to select the week’s purchases. For in the case of nutrition and health, just as in the case of education, the gentleman in Whitehall really does know better what is good for the people than the people know themselves.

{Note from the blogger: Americanizing the end of the last sentence would translate to something like “the Department of Health and Human Services really does know better what is good for the people than the people know themselves.”}

(Original quote taken from David Gratzer’s The Cure: How Capitalism Can Save American Health Care).

Whether it’s Mr. Schmitt’s soft view (people want someone else to make their insurance decisions for them), or Lord Jay’s harder one (people need someone else to make their insurance decisions for them), the implication is the same -- the debate about employer-based healthcare is more than a debate about economic factors, it is also a debate about government co-opting corporate bureaucracies in an attempt to engineer better lives for individuals.

Is Mark Schmitt right? Do people support the employer-based system because, at some level, they want someone to help them choose their coverage, and not just because they are afraid that the employer-based healthcare system is the only non-directly government run system that can provide them with affordable coverage?

People who believe there’s a better way to provide insurance than through the existing system need to know the answer to this question, so they will know if they need to make the case for a more open insurance market in terms broader than just fiscal and economic viability.

3:18 PM
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Andrew,
You leave out the most important perspective: Employer-based healthcare, while flawed, it the best feasible option currently available and people are reacting in a self-interested manner as they usually do in a free market economy.

It's infeasible to insure on an individual basis, because the healthy people who subsidize health insurance would opt out, while the sick people would remain. The only way to avoid this would be to have the government require people to buy health insurance or for government to provide insurance.

In a government-mandated private sector solution, you're now requiring individuals to negotiate with a large insurance carrier which puts the individual at a disadvantage. Most individual get a better deal using an employer group's buying power and leverage.

Under a government-mandated public sector solution, the government would provide insurance (universal, single payer). This would eliminate choice of doctor, put restrictions on what care an individual could receive, etc. It's all good until your assigned doctor tells you, "We can't perform heart surgery on 70 year olds, the government says it's too expensive to treat someone as old as you."

Employers have a right to complain about healthcare costs. But they need to be aware that there are many leaders in RI's political leadership who are trying to convince businesses that private sector solutions have failed. They suggest that government has the solution. What they talk about is the plan to tax businesses to pay for government-based healthcare.

Posted by: Anthony at February 23, 2007 4:51 PM